New Obama stimulus gets mixed reviews from area politicians, experts

President Obama's new $350 billion jobs plan was met with a mixed reaction in Michigan on Wednesday as the prospects of getting the three-part plan through Congress grew increasingly questionable.

The Obama plan calls for: a $100 billion permanent extension of the federal tax credit for businesses' research and development costs; a 100 percent write-off on the cost of investment in new plants and equipment for industry through 2011; and $50 billion in infrastructure improvements targeting roads, bridges and airports.

U.S. Rep. Sander Levin said the new legislation serves as a solid complement to a bill designed to aid small business that has been blocked by Senate Republicans.

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"I applaud the President for his continued recognition of the need for further action to support jobs and economic recovery.

Recent jobs and economic data underscore the fact that while we've made progress in pulling the economy out of recession, additional steps are needed to accelerate investment and hiring," said Levin, a Royal Oak Democrat who represents most of Macomb County.

"That's why those who have blocked consideration of small business and jobs legislation need to put partisanship aside and allow Congress to complete those bills as soon as possible."

But Levin's Macomb County counterpart, U.S. Rep. Candice Miller, said the Obama administration's proposal amounts to a second, costly stimulus plan in the face of evidence that the first stimulus had little impact on employment. Instead, she said, the president should quickly support an extension of the George W. Bush tax cuts for all income groups.

"The facts are clear -- the stimulus has failed to provide the promised jobs, and all this administration has to offer is more of the same.

Continuing to do the same thing and expecting a different result is the height of irresponsibility," said Miller, a Harrison Township Republican. "We cannot spend and borrow our way into prosperity."

Economist David Sowerby agreed with Miller that an extension of the tax cuts is needed, combined with a reduction in the U.S. corporate tax rate and some other basic measures which would have far more impact than the president's plan.

"If we have a question on a test and we're not given a choice of A or B or C or D -- and this (plan) was E -- then this would be a good choice," said Sowerby, portfolio manager for the Loomis Sayles investment firm in Bloomfield Hills.

Amidst growing concerns about a "double dip" recession, Sowerby indicated that Wall Street and Main Street may have concerns that the Obama approach is too narrow in scope.

"It simply doesn't go far enough. It tries to pick small pockets of the economy rather than giving broad-based help to all employers," he said.

For those critics who said the 2009-10 stimulus plan dedicated too few dollars to transportation infrastructure, Gov. Jennifer Granholm said the president's new public works plan is good news for Michigan, a state that has numerous road projects on the drawing board.

The Obama plan would rebuild 150,000 miles of roads nationwide, build or maintain 4,000 miles of rail lines, and provide 150 miles of new airport runways.

"Not only will this new investment mean new jobs, but it will help fix our state roads and make investments in our airports," Granholm said.

But first, the president's team -- and their Democratic allies in Congress -- must push the legislation through the House and Senate when lawmakers return from their summer recess next week. That kind of legislative initiative, especially with eight weeks until the mid-term elections, may be a job that can't be accomplished.

The proposed tax breaks for business are ideas that have enjoyed broad Republican backing in the past. But in today's toxic political atmosphere, the president is unlikely to get much -- if any -- GOP help.

Still, his plans put Republicans on the spot, making it harder for them to say no to legislation they once embraced.

In a speech today in Cleveland, Obama will formally ask Congress to endorse his plan. Clearly frustrated by the halting economic recovery and mindful of polls showing Republicans poised to make big election gains in November, Obama had his economic advisers come up with a fresh set of proposals with job-creating potential.

The administration has not spelled out exactly how it would pay for all the new proposals, which predictably drew significant GOP derision of a plan that would add to the federal deficit.

The potential sources of revenue to finance the plan -- corporate loopholes and levying targeted tax hikes on big business, particularly on the oil and gas industry -- may spark even more Republican opposition.

But some conservatives see light at the end of the tunnel if the newest White House economic recovery effort is adopted.

Rep. Dave Camp of Midland, the senior Republican on the tax-writing House Ways and Means Committee, which is chaired by Levin, called Obama's business tax measures serious proposals worthy of consideration. But he said that "raising taxes to cut taxes is at best a zero sum game."

The proposed tax break for research and development has been around in one form or another since 1981 and in the past has drawn bipartisan support. However, Congress has recently extended it for short periods of time, usually just for one or two years, with frequent lapses that make it hard for businesses to plan. The credit most recently lapsed in 2009. Obama has long advocated making the credit permanent.

His proposal to let companies quickly write off 100 percent of their investments in new plants and equipment is similar to proposals advanced several times by President Bush -- with considerable GOP support at the time.

A senior Obama administration official said this "expensing" provision would potentially benefit 1.5 million corporations and several million individuals.

Chris Edwards, director of tax policy for the libertarian-leaning Cato Institute, said he favors both a permanent research tax credit and Obama's proposal for 100 percent expensing, calling both "very positive" steps and a sign that the administration is getting seriously worried about the economy.

Still, Edwards added, "the administration would nullify the benefits if they are matched by various tax (hike) proposals for businesses."